Global steel body hikes its demand forecasts

▶ China-US trade tensions clouding growth, but sharp decline unlikely

The World Steel Association on Tuesday doubled its 2018 and 2019 forecasts for growth in global demand for the material used in everything from cars to construction, but said that trade tensions were clouding the outlook for the sector.

The caution over trade from a body that represents 85 percent of global steel will stoke concerns that the tit-for-tat tariff dispute between the US and China is undermining global growth, especially after the International Monetary Fund (IMF) downgraded its economic forecasts last week.

“Global steel demand faces uncertainty from tensions in the global economic environment,” the World Steel association, commonly known as worldsteel, said in a statement issued at its annual general assembly this year which was held in Tokyo, Japan.

The steel industry, , worth about $900 billion a year, is seen as a gauge of world economic health.

Worldsteel represents more than 160 steelmakers.

“Steel demand is expected to rise 1.4 percent next year to 1.681 billion tons,” worldsteel said. That is double the 0.7 percent growth it forecast in April.

Still, that would mark a slowdown from the 3.9 percent growth in appetite expected for 2018, to 1.658 billion tons, driven by the world’s biggest consumer, China.

Steel use in China is expected to rise 6 percent this year to 781 million tons and be flat in 2019, the body said.

“China steel demandgrowth is expected to decelerate in the absence of stimulus measures,” worldsteel said.

Consultancy CRU estimates that gross domestic product growth in China, which produces and consumes half the world’s steel, could drop by up to 1 percentage point if ChinaUS trade tensions hurt investor confidence.

With countries including Germany cutting economic growth projections and bearish sentiment increasing, “that will impact intentions on investment and will eventually lead to some downside risk for steel demand,” said CRU analyst Wang Li in Beijing.

But Li said there will unlikely be a sharp decline in China’s steel demand.

China has been eliminating excess and outdated steel capacity, including more than 100 million tons of illegal induction furnaces in 2017, in a bid to pare its bloated steel sector.